In the complex landscape of financial regulations, it’s crucial for businesses and individuals to understand the provisions that govern their transactions. One such provision that often raises questions is Section 269T. Let’s delve into some frequently asked questions to demystify the disallowance of cash expenses or limits on cash transactions.
Section 269T: Understanding the Basics
1. What is the provision of Section 269T?
Section 269T restricts individuals from repaying loans, deposits, or specified advances in cash. The repayment must be made through an account payee cheque, account payee bank draft, electronic clearing system, or other prescribed electronic modes.
2. Which transactions are covered under Section 269T?
Repayments for loans, deposits, or specified advances fall under Section 269T. This includes loans or deposits repayable after notice or a period and advances related to the transfer of immovable property.
3. What is the threshold limit for Section 269T?
The provision is triggered when the transaction value exceeds Rs. 20,000. However, a recent amendment by the Finance Act, 2023, raises the threshold to Rs. 2 lakhs for transactions involving Primary Agricultural Credit Societies (PACS) or Primary Co-Operative Agricultural and Rural Development Banks (PCARD).
4. Are there exceptions to Section 269T?
Exceptions include transactions with the government, banking institutions, corporations established by law, government companies, and other notified institutions.
Electronic Modes and Other Relevant Sections
5. What is the penalty for not complying with Section 269SU?
Failure to provide the facility for accepting electronic payments, as required by Section 269SU, results in a penalty of Rs. 5,000 per day of non-compliance.
6. Which payment modes are covered under prescribed electronic modes?
Prescribed electronic modes include credit cards, debit cards, net banking, IMPS, UPI, RTGS, NEFT, and BHIM Aadhaar Pay.
7. What is the provision of Section 40A(3)?
Section 40A(3) disallows deductions for expenditures exceeding Rs. 10,000 if paid in a mode other than account payee cheque, bank draft, or prescribed electronic modes.
8. Is disallowance made for payments by way of book adjustment?
Rule 6DD(d) exempts disallowance if payments are made by adjusting liabilities for goods or services.
Section 269SS: Addressing Loan and Deposit Transactions
9. What is the provision of Section 269SS?
Section 269SS prohibits individuals from accepting loans, deposits, or specified sums in cash. Transactions must occur through account payee cheques, bank drafts, or prescribed electronic modes.
10. What is the threshold limit for Section 269SS?
The provision is triggered if the transaction value exceeds Rs. 20,000. However, for transactions involving PACS or PCARD, the threshold is raised to Rs. 2 lakhs.
11. Are there exceptions to Section 269SS?
Exceptions include transactions with the government, banking institutions, corporations established by law, government companies, and other notified institutions.
12. What is the penalty for contravention of Section 269SS?
A penalty under Section 271D, equivalent to the amount accepted in contravention, is levied.
Section 269ST: Regulating Large Cash Receipts
13. What is the provision of Section 269ST?
Section 269ST restricts individuals from receiving Rs. 2 lakhs or more in cash. Transactions must occur through account payee cheques, bank drafts, or prescribed electronic modes.
14. Is there an exception to Section 269ST?
Exceptions include transactions with the government, banking institutions, or other notified persons.
15. What is the penalty for contravention of Section 269ST?
A penalty under Section 271DA, equal to the amount received in contravention, is imposed.
Section 269SU: Mandatory Electronic Payment Facility
16. What is the provision of Section 269SU?
Section 269SU mandates businesses with turnover exceeding Rs. 50 crores to provide facilities for electronic payments using specified modes.
17. Are there exceptions to Section 269SU?
The provision does not apply to businesses exclusively engaged in B2B transactions, provided 95% of the receipts are non-cash.
Understanding these provisions is crucial for navigating the financial landscape effectively. Stay informed and compliant to ensure a seamless financial journey.
